Wealthy Chinese sell off luxury homes as vacancy tax rates bite

There’s been a dramatic shift in the luxury home market, particularly in Sydney and Melbourne, with wealthy overseas Chinese owners selling up.

Hong Kong Telco tycoon Canning Fok and his wife are selling their Sydney property for $41m.

A string of major luxury home sell-offs, coupled with an almost non-existent overseas Chinese buyers’ market in Melbourne, have left those who sell the homes of the rich feeling a little bit stumped.

Luxury Australian homes with ocean views, beach access and enough space to host half the office for dinner have long been sought after by wealthy overseas Chinese buyers. But over the past couple of years, and the past few months specifically in Sydney, there’s been a dramatic shift in the market.

The Sydney market has had several homes owned by wealthy overseas Chinese businesspeople listed in recent months. In April, Canning Fok, a Hong Kong telco tycoon, listed his Vaucluse mansion with a price guide of $41m.

Hong Kong telco tycoon Canning Fok.

Mr Fok, who works for Hong Kong’s richest man Li Ka-shing, is chairman of TPG Telecom and a director at Vodafone Hutchison since 1999.

His Queens Ave home in Sydney’s east has one of the city’s best views of the Harbour Bridge alongside five-bedrooms and four bathrooms set over three levels.

The home is on the same avenue as Jim Lin, who bought 1920s mansion Villa Igiea for $52m in 2015.

Jing Wang, head of Chinese-backed developer Mayrin Group, is set to make more than $5m profit on her Vaucluse home when it goes to auction next month.

Ms Wang, who bought the Wentworth Rd home in March for $19.78m, has set the home to go to the hammer by Simmons Double Bay principal Steven Zoellner with a $25m price tag.

Sydney real estate agent Monika Tu, founder of Black Diamondz agency and recent Luxe Listings star, who made a name for herself connecting wealthy Chinese buyers to Australian mansions, says tax might be scaring off the overseas Chinese market.

The stunning outlook from Canning Fok’s Vaucluse home.

“The vacancy tax rate is just so expensive and it all really depends on how many days you are in the country,” she said. “I know one owner in Vaucluse who had to pay $400,000 a year in tax because physically they could not be here at the moment.”

Ms Tu said there was some movement in off-market deals, but these homes had largely been bought and sold from locals.

“Recently they’ve all been Australian residents,” she said. “They’re Chinese, but all Australian residents.”

This falls in line with what Sotheby’s director Michael Pallier has seen. “We haven’t noticed any difference in the number of Chinese vendors and buyers that have dealt with recently,” he said.

“(However) a lot of the Chinese clients we deal with are Australian citizens and live and work here permanently.”

Villa Igiea in Vaucluse.

In Melbourne, luxury homebuyer’s agent David Morell said overseas Chinese buyers had all but disappeared.

“What’s happened down here in Melbourne, and I’m sure it’s the same in Sydney, is that since Covid and the border has been closed down, the ability to, I guess, transfer money hasn’t happened,” he said. “Basically vendors are selling at their own peril to offshore buyers because people haven’t got the ability necessary to complete (the transaction).”

Mr Morell said before the pandemic, the Melbourne market had seen a healthy interest from wealthy overseas Chinese buyers and the middlemen who negotiated their transactions. Since March 2020, both the buyers and the agents had vanished, he said.

Mr Morell said it was not all bad news for the Melbourne market. Previously, it had not been “a level playing field” and the reduced number of overseas buyers had made for a more “transparent” market.

Ms Tu added that in recent months, she had experienced several Chinese buyers make the shift from Melbourne to Sydney.

“One of the reasons has been that their kids are looking to study … and also the waterfront,” she said. “Sydney’s waterfront is much more exciting.”